Question

Question 1

"Consider the following deposits made into a savings account that earns a constant interest compounded annually. 'An' represents the actual deposits made at the end of year n. 'Pn' represents the present value of the deposit in year n. The present value 'Pn' of $790 in year 2 is $707.40. Assuming there are only 4 deposits made, calculate the total amount in the savings account at the end of year 4.
'An' in $ (Years 0 through 4):
0
430
790
170
0"

Question 2

"You are borrowing $9,900 now, which you will pay back at the end of 21 years. You are considering two separate interest rates:
a. A fixed 6.9% annual interest rate.
b. A variable interest of 2.6% annual interest for the first 5 years; 6% annual interest rate for next 5 years; and i% interest rate for the remaining years.
Assuming you desire to pay the least amount of money back at the end of 21 years, what value of i makes you indifferent between options a and b? With both options, you make exactly one payment at the end of 21 years. Enter your answer as a percentage between 0 and 100."

Answer 1

Question 1)